If average total cost > average variable cost > price, a profit-maximizing firm in a perfectly competitive market should:
A. continue to produce its current output level.
B. shut down in the short run.
C. increase its output level to minimize its loss.
D. None of these
Answer: B
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Most economists believe that the return of ________ during the 2007-2009 recession is a key reason why the recession was so severe
A) high interest rates B) rapid inflation C) high tariffs D) financial instability
If the marginal profit from increasing output by one unit is negative, then to attain an optimum, the firm should
A. increase output until marginal profit equals zero. B. reduce output until marginal profit equals zero. C. increase output until marginal profit is maximized. D. reduce output until marginal profit is maximized.
Assuming that dry cleaning is a normal good, an increase in consumer income, other things being equal, will:
a. increase the demand for dry cleaning. b. decrease the demand for dry cleaning. c. increase the quantity demanded of dry cleaning. d. decrease the quantity of dry cleaning demanded.
Which of the following causes of unemployment is not associated with a wage rate above the market equilibrium level?
a. efficiency wages b. job search c. minimum-wage laws d. unions